Definition
A governance token is a digital asset used in a protocol's decision-making arrangements. Depending on the implementation, holders may submit proposals, delegate voting power, approve parameter changes, or influence how a treasury is used. Some votes directly trigger on-chain execution, while others signal preferences that an operator or separate process must implement. The token's actual powers are defined by contracts and governance procedures, not by the label alone. Voting thresholds, delegation, quorum, timelocks, administrator privileges, and the distribution of holdings can substantially affect practical control. Owning a governance token does not automatically grant company equity, revenue rights, or authority over every part of an application. A protocol may also have emergency powers outside ordinary voting. Understanding who can propose, approve, execute, or block a change is therefore more useful than assuming that token ownership provides equal or comprehensive participation.
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